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“Estimated Financial Effect of the “American Health Care

Both the Republican House AHCA and Senate BCRA bills have proposed major reforms relative to current law (ACA) that would substantially reduce the number of persons covered, moderately lower the budget deficit over a decade, reverse the tax increases on the top 5% (mainly the top 1%), dramatically cut Medicaid payments (25-35%) that benefit lower-income persons, and expand choice by allowing lower quality insurance to be purchased at lower prices for the young and middle-aged.[53][54][55]

Key provisions of the Republican Senate BCRA take effect over several years and include:

  • Eliminate employer and individual mandates and related penalties, substituting a one-time premium increase of 30% for persons that were without coverage previously for a specified time period (63 days).
  • States would be allowed more flexibility in establishing essential health benefits (i.e., insurance policy content).
  • Change tax credit/subsidy formulas used to help pay for insurance premiums (initially age-based, later modified to income-based) and eliminate a “cost-sharing subsidy” that reduced out-of-pocket costs.
  • Provide funding to health insurers to stabilize premiums and promote marketplace participation, via a “Long-Term State Stability and Innovation Program” with features analogous to a high-risk pool.
  • Reduce income ceiling used for Medicaid eligibility and substitute a tax credit for those below 100% of the poverty line.
  • Reduce Medicaid payments relative to current law, by capping the growth in per-enrollee payments for non-disabled children and non-disabled adults, by using a lower inflation index.
  • Repeal taxes on high-income earners established under ACA/Obamacare, repeal the annual fee on health insurance providers, and delay the excise tax on high premium health plans (the so-called “Cadillac tax”).
  • Allow insurers to charge premiums up to five times as much to older people vs. young people, instead of three times, unless the state sets a different limit.
  • Remove federal cap on the share of premiums that may go to insurers’ administrative costs and profits (the “minimum medical loss ratio”).